The theory that Bitcoin’s price surge of 2017 was the result of an individual manipulating has reportedly been debunked by specialist cryptocurrency researchers who claim it is “unconvincing”.

Earlier this month, two academics – University of Texas professor John Griffin and Ohio State University’s Amim Shams – published an academic paper claiming that a lone actor was able to cause the price of Bitcoin to surge once it fell below a certain threshold.

They claimed this market manipulation by a sole actor led to the Bitcoin surge of 2017 which saw its price rise to $US20,000 and its market cap hit $US326 billion, dubbed the “one whale theory”.

The theory claims the market manipulation was done by the purchasing of Tether, a stable coin cryptocurrency meant to hold its value at $US1, on exchange platform Bitfinex.

The academics found that Bitcoin purchases on Bitfinex using Tether increased whenever Bitcoin’s value fell below a certain point, claiming this showed that the rapid rise of Bitcoin was the result of one actor on Bitfinex.

But this theory has now been debunked by cryptocurrency analytics firm LongHash, who claim that the idea that one person caused the price surge of Bitcoin is unconvincing.

The researchers calculated a metric dubbed “Tether Purchasing Power” – the market cap of Tether divided by the market cap of Bitcoin – to determine whether Tether could have been used to manipulate the price of Bitcoin.

They found that the market manipulation power of Tether increased up until the American summer of 2017 and then decreased until the end of the year.

It also rapidly increased when the price of Bitcoin fell, peaking at the end of last year.

“This suggests that even if Tether were indeed manipulating the market, its ability to do so actually is strongest when the Bitcoin price falls,” the LongHash researchers said.

“This contradicts the claim that Tether issuance drove the 2017 bull market.

“The supply of Tether actually failed to keep up during the height of the bull market.”

The academics claiming the “one whale” theory also relied on the fact that because Tether is audited at the end of every month, it needs to sell some of its Bitcoin holdings at this time if a large amount of Tether has also been issued, causing the price of Bitcoin to drop towards the end of each month.

But the LongHash researchers said that the academics failed to take into account other reasons why this happens, and if the two most significant months are removed, then the effect “fails to be statistically significant”.

“This part of their conclusion is based upon two outliers in a small sample size of 24 – that isn’t particularly convincing,” they argued. “It is widely known that whales can move short-term crypto prices due to exchange slippage, so this part of the paper does not seem to contribute to its main thesis.

“Overall, the paper does a very poor job of convincing us that Tether is manipulating the market.”

The researchers also found that Tether actually failed to keep up supply during the great Bitcoin surge of 2017.

“As more and more stable coins enter the marketplace, some of the controversies surrounding Tether may also gradually dissipate,” they said.

The company behind Tether and Bitfinex also hit back at the academics’ claims, saying they were “built on a house of cards”.

“The authors demonstrate a fundamental lack of understanding of the cryptocurrency marketplace,” Tether said.

Weiss Ratings’ Juan Villaverde and Martin Weiss also told Cointelegraph that there is “abundant anecdotal evidence” contradicting the “one whale” theory.

“For example, exchanges were swamped and not able to onboard new customers – Google searches for ‘Bitcoin’ and ‘cryptocurrency’ were off the charts,” they said.

“New crypto businesses and ICOs were popping up every day. All of this – and more – suggests that the crypto surge of 2017 was very much a mass phenomenon, with heavy public participation.”

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